$16,000,000,000 health department used a single Excel spreadsheet to manage its finances and it didn't end well
A billion-dollar public health system uses a single Excel spreadsheet to manage its finances - and it's not going well.
Health New Zealand (HNZ) was set up in 2022 to replace 20 district health boards in the hope of being more cost-effective and consistent.
With a budget of NZ$28 billion (around US$16 billion), the organisation assured lawmakers it would stay within its financial limits for the 2023-24 fiscal year. However, the prediction turned out to be incorrect and HNZ blew its budget, triggering a financial review that uncovered some serious issues.
A Deloitte-led review found that HNZ had essentially lost 'control of the critical levers that drive financial outcomes' and could not 'identify and respond to the disconnect between expenditure and revenue.'
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One of the biggest revelations was that the entire system’s financial management was presented on a single Microsoft Excel spreadsheet, including 'consolidation, journals, business-critical reporting, and analysis.'
Besides the obvious issues, the report also noted five major problems with the sheet.
First, the financial information was reportedly often 'hard-coded,' making it difficult to trace changes or update information efficiently.
It was found that errors typically went unnoticed until later periods such as double-releasing funds or misreporting accruals, not to mention the spreadsheet carried a high risk of human error such as simple typos or misplaced zeros.
Additionally, any changes made to past financial reports and district-level data often didn’t carry over correctly which resulted in data discrepancies.
Finally, the spreadsheet was easy to manipulate information on as there was no direct link between the spreadsheet and accounting systems. On top of that, HNZ’s reliance on this system made financial reporting a slow process. "Monthly financial reporting usually took 12-15 days to consolidate and five days to analyse," the report said.
“The use of an Excel spreadsheet file to track and report financial performance for a NZ$28bn expenditure organisation raises significant concerns, particularly when other more appropriate systems are present on the IT landscape."
If Excel as the backbone of a national health budget wasn’t enough of a red flag, Health Minister Simeon Brown revealed even more about HNZ’s operational challenges.
According to Brown, the HNZ runs around 'an estimated 6,000 applications and 100 digital networks,' which equates to one application for every 16 staff members. Despite the organisation being 'two years old,' Senior Leadership Team members 'have only just begun weekly in-person meetings, and have continued to operate from different offices.'
Surprisingly, despite all that's gone wrong, the Minister doesn’t have a plan to get off Excel or address its wider tech issues.
What he did promise though was to investigate 'creating a separate Health Infrastructure Entity under Health New Zealand, to manage and deliver physical and digital assets.' But the details of that plan or an expected timeline for rollout are still up in the air.